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Wills and Estate Planning – Answers to Frequently Asked Questions

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Have you thought about what will happen to your assets when you’re gone? Most Americans, in fact, have not. But it doesn’t have to be so daunting.

 

Estate planning is simply the process of deciding how you would like your assets distributed after you die. Dealing with the estate of a family member who had not prepared for their death can be frustrating, time consuming, expensive and emotionally draining. By having clear plans in place, you will make it easier – both financially and emotionally – on your loved ones left behind. Below are a few commonly asked questions on wills and estate planning. It’s important to realize that the law is always changing and this information is not intended to replace legal advice regarding your particular situation.

 

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I’m married. Do my spouse and I really need separate wills?

Yes, even if your wishes are the same, you each need your own will. A will is a legal document that allows you to transfer property that you own on your death to beneficiaries that you designate. But since you can only transfer your own property, and not what is owned by your husband or wife, your spouse needs his or her own will.

 

What if I change my mind? Can I make changes to or revoke my will?

Yes, you can change your will at any time as long as you are mentally competent. For small changes, a codicil – or amendment that changes specific provisions of your will but leaves all others unaltered – is an inexpensive way to go. For major changes, such as adding a new spouse or cutting off a beneficiary entirely, it may be wise to create a new will. It is also recommended that you review your will and other documents related to your estate on an annual basis.

 

Do I need a trust?

People create trusts for different reasons. One of these is that a trust allows you to avoid probate, or the process of settling the estate through the court. Parents may set up trusts in their wills so if anything happens to them before their children are old enough to manage their own assets, the money will be protected. Often, trusts are set up so that inheritances are received incrementally over a period of time, until a child reaches a certain age. These are a few examples but there are many additional reasons to create a trust.

 

Who should be the trustee?

A trustee is a person designated to manage the property and administer the trust assets in accordance with the terms of the trust for the benefit of your children or beneficiaries. You may select a family member, trusted friend or professional trustee to oversee its administration. All are good options. Though relatives often fill this role, using a friend or professional trustee can help alleviate any potential for family conflict.

 

In some cases when trusts are created, the trustees are those that are creating the trust, also referred to as grantors. When the trustee passes away or is no longer able to administer the trust themselves, the successor trustee – often a family member, friend or other party – takes over. It all depends on the purpose and/or type of trust created.

 

What if I find that I am no longer able to care for myself?

Planning for your incapacity is just as important as planning for your death. If you become seriously ill, disabled or injured, you need to make sure your affairs are taken care of by someone who is capable of doing so. This involves two documents essential to your estate plan:

 

A durable power of attorney
This document grants a designated person special authority to act on the behalf of another person. A durable power of attorney is written and signed in advance, before you need help. Once you become incapable of managing your own affairs, you cannot designate someone else to handle them. It is also important to note that power of attorney cease upon death.

 

A healthcare directive with living provisions
This document designates a person to make healthcare decisions on your behalf if you become ill. This person, your healthcare agent, has the authority to decide where you live or receive care and review your medical records. A healthcare directive also states your wishes concerning end-of-life care in the event you become terminally ill.

 

If you do not have these documents prepared and signed ahead of time, your family will need to have a guardian and conservator appointed by the courts – a process that can be lengthy, expensive and emotional for everyone involved.

 

Will I have to pay estate tax?

Estate tax is a tax on your right to transfer property at your death; both state and federal taxes are assessed. Currently in 2013, the federal taxable estate is $5.25 million which means any estate over that amount is subject to estate tax. To determine your state estate tax, check with the state in which you currently live. Trusts, gifts and charitable donations all provide ways to reduce your taxable estate. Talk with your estate planning professional to determine the strategy that makes the most sense for you.

 

But remember, every will and estate situation is different and that laws regarding wills and estates are subject to change. You should consult your tax/legal counsel for advice and information concerning your particular circumstances. 

 

 

Nikki Mertz
Retail Banking | VP
Bank Forward Carrington

 

Nikki is also a registered investment representative.

 


 Disclaimer

This advice is for general information purposes only and may not apply to you. Every will and estate situation is different and that laws regarding wills and estates are subject to change. You should consult your tax/legal counsel for advice and information concerning your particular circumstances. Neither Investment Centers of America nor any of its representatives may give tax or legal advice.

Investment Centers of America, Inc. (ICA), member FINRA, SIPC, a Registered Investment Advisor, is not affiliated with Bank Forward or Invest Forward. Securities, advisory services and insurance products offered through ICA and affiliated insurance agencies are

  • Not insured by the FDIC or any other Federal Government agency
  • Not a deposit or other obligation of, or guaranteed by any bank or their affiliates
  • Subject to risks, including the possible loss of principal amount invested.
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GuestFriday, 31 October 2014

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